SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Act of 1934
Date of Report (Date of earliest event reported): March 9, 2000
Leak-X Environmental Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-17776 23-2823596
(State or other
jurisdiction of
incorporation) (Commission File Number) (IRS
Employer Identification No.)
790 East Market Street, Suite 270, West Chester, Pennsylvania 19382
(Address of principal executive offices)(zip code)
Registrant's Telephone Number, including Area Code:
(610) 344-3380
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
Leak-X Environmental Corporation (the "Company") is currently in an over
advance position under its Loan Agreement with its lender, First Union National
Bank (the "Bank"). The Loan Agreement allows the Company to borrow 80% of
eligible accounts receivable, up to a maximum of $750,000. On February 23,
2000, the Company determined that its borrowings under the Loan Agreement
exceeded the permissible amount by approximately $90,000 based on eligible
accounts receivable as of January 31, 2000. Under the Loan Agreement, the
Company is required to repay any such over advance immediately. However, on
February 29, 2000, the Bank indicated that it would allow the over advance
position, but it expected the Company to obtain alternative financing of its
debt as soon as possible, preferably by March 31, 2000.
On March 9, 2000, the Bank notified the Company that they understood that
the Company was in the process of obtaining alternative refinancing and that
the Bank expected the Company to payoff the then outstanding balance of
$415,313.71 by March 31, 2000. The Company 's borrowings under the Loan
Agreement continue to exceed the permissible amount by approximately $101,000.
The Company is currently unable to repay the over advance which is an event
of default under the Loan Agreement and is unlikely to be able to payoff the
outstanding balance requested for payment by March 31, 2000.
The Company is in the process of trying to secure alternative financing
and negotiate repayment terms of the outstanding balance with the Bank. If
the negotiations for relief with the Bank are unsuccessful and if the Company
cannot meet the Bank's required payment on March 31, 2000 by obtaining
alternate financing, the Bank would have the right to commence legal action
against the Company for the repayment of the entire debt and to proceed
against the Company's assets. Such an event would likely prevent the Company
from continuing as a going concern.
The statements contained herein include forward looking statements that
involve a number of risks and uncertainties. In addition to the facts
discussed, among the other factors that could cause actual results to differ
materially are the following: the ability of the Company to negotiate acceptable
repayment terms with the Bank or to obtain alternative financing; enforcement
of environmental regulations, business conditions, and growth in the industry
and general economy: and competitive factors, such as rival designs and prices;
and changes in sales mix.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto
duly authorized.
LEAK-X ENVIRONMENTAL CORPORATION
(Registrant)
Dated: March 16, 2000
By: /s/ Joyce A. Rizzo
Name: Joyce A. Rizzo
Title: Chief Executive Officer
